Category Archives: Housing

Last month, the U.S. Conference of Mayors released a report that offered a discouraging view of homelessness across the country. Among 25 cities participating in a survey by the organization, 15 said the number of homeless in their communities had been increasing and another three said the number had stayed the same as last year. The other seven reported declines.

Some of the biggest cities in the survey admitted turning away a significant share of their homeless population because emergency shelters simply don’t have enough beds. Philadelphia reported turning away a third of those seeking shelter, Charlotte 25 percent, and Boston 20 percent.

New York City didn’t participate in the survey, but it could have provided some stark numbers of its own. Not only is the number of homeless on the rise here, but individuals and families are experiencing ever-longer stays in shelter beds. While court orders dating to the 1980s provide the homeless with a legal right to shelter, some advocates would argue that the city effectively turns people away through its eligibility review process. Still, with a growing number of people entering the homeless system, the city has added new shelter sites in recent months.

Over the first five months of this fiscal year (July-November), an average of 11,184 families, including those with children and adult families without children, spent the night in the city’s shelter system. That’s up by more than 1,600 families, or 17 percent, compared with the same five-month period last year.

These families are remaining in the shelter system more than a month longer on average than last year. Families with children typically spent 355 days in the city’s shelters as of the first four months of fiscal year 2013—up 40 days compared with the first four months of last fiscal year. For families without children, the picture is much the same. Average stays in the shelter system increased by 51 days, to 443 days during the first four months of this fiscal year.

The number of single adults spending the night in a city shelter has also grown by 10 percent, and averaged 9,213 over the first five months of this fiscal year. They, too, are also spending more days on average in the shelter system: 275 days during the first four months of this year, 12 days more than for the same four months last year.

There’s been a steady rise in the number of homeless and longer stays in the shelter system since the city eliminated the Advantage rental assistance program last year . The program had helped the homeless, mostly homeless families, leave city shelters by providing temporary rent subsidies. The program ended after the state eliminated its share of funding for the program, which cost in total about $210 million in 2011. The city’s share of the program’s cost was about $114 million.

Not surprisingly, more people and longer stays are driving up shelter spending. In November, the Mayor added $42.9 million in city, state, and federal funds to the budget for family shelters, bringing the total budget for 2013 to $466.5 million.

But IBO’s Elizabeth Brown says the additional funding is not enough to meet likely costs. Based on recent trends, she estimates that providing families with emergency shelter will cost about $42 million more than the Bloomberg Administration has budgeted for this year. Costs for emergency shelter for homeless single adults have also climbed.

In June 2004, the Mayor announced a five-year plan to cut homelessness by two-thirds. That plan never came close to meeting its goal and in recent months the city has sheltered record numbers of homeless New Yorkers. On Christmas Eve, more than 47,300 children and adults bedded down in the city’s shelters—a population about equal in size to the number of people who live in the upstate city of Binghamton.

New York City itself may not be for sale, but the rights to tie your corporate name and logo to a variety of city facilities and services may increasingly be up for grabs as public agencies look for ways to raise revenues to meet growing expenses and offset city funding cuts.

On September 14, the city’s parks department is scheduled to receive bids from companies for the right to affix their names to 55 dog runs and 631 basketball courts. The city’s 2013 budget anticipates $1.5 million in annual revenue for the naming rights to the dog runs and $3.5 million from the basketball courts in fiscal years 2013-2016. An additional $8.0 million in annual revenue over the same period is expected through more sponsorships, although the parks department has not yet announced what facilities it will offer to potential sponsors. The city’s financial plan expects the parks department to take in $13 million annually in sponsorship revenues through 2016.

The parks department’s effort to sell these naming rights is being done under an initiative it calls the NYC Parks Corporate Partnership Program. Under this program, the agency says, “[C]ompanies can invest in a unique opportunity to promote their brand through NYC parks assets.” The parks department is offering potential partners rights that can stretch from onsite to online.

IMG Worldwide, a major sports and fashion marketing and licensing company, has been enlisted to play a key role in the parks’ partnership program (IMG is the marketer of New York City Fashion Week). The parks department Web site describes IMG as “the exclusive designated agency to develop and commercialize this opportunity.” Proposals for sponsoring the dog runs and basketball courts are to be sent to IMG. For its work on behalf of the parks department, IMG is reportedly being paid by NYC & Company, a private organization that does tourism promotion and marketing for the city. In 2011, about 40 percent of NYC & Company’s $36.4 million in revenues came from city funding.

The parks department is not the first agency to market naming or sponsorship opportunities. The Department of Transportation’s bike-share program, now expected to start rolling in March 2013, is being funded solely with sponsorship money: $41 million from Citigroup and $6.5 million from MasterCard. For its cash, Citigroup will get its name on 10,000 bikes and 600 docking stations around the city. MasterCard is providing the payment system for the program.

Similarly, the Metropolitan Transportation Authority is seeking to take greater advantage of the MetroCard’s ubiquity as well as its iconic link to the city by offering advertising space on the front of the card. The back of the card has already been available at costs ranging from $25,500 for 50,000 cards to $450,000 for 2.5 million cards. Rates for the front of the card haven’t been determined yet.

The transportation authority has also sold naming rights to the Atlantic Avenue-Pacific Street subway stop for $200,000 a year for 20 years to the British banking firm Barclays. The station, which sits under the soon-to-be opened Barclays Center arena in Brooklyn, is now called Atlantic Avenue-Barclays Center (Barclays paid $400 million over 20 years to purchase naming rights for the publicly subsidized arena from the Nets).

At least one other local agency has declared its intention to offer up its facilities for some form of advertising. Last September, the Daily News reported that the New York City Housing Authority was floating the notion of offering billboards to advertisers at its development projects, an idea that provoked unease among some residents and elected officials.

But the housing authority still sees its 2,600 buildings in 334 developments citywide as an opportunity for prospective advertisers. In January, the housing authority released Plan NYCHA: A Roadmap For Preservation, a five-year plan to improve services and increase partnerships and revenues. Although it provides only the barest of details, the plan states that the housing authority aims to “design and launch a plan to offer NYCHA property for advertising with input from residents.”

New York’s streets were once believed to be paved with gold. In the future, they may increasingly be paved with sponsorship dollars.

With the New York City Housing Authority facing a recent barrage of critical press, it’s not surprising that a seemingly small change in how the housing authority will be billed for water has been overlooked. But what may seem like a small drip of an issue now could open a floodgate later.

In an extension of its effort to encourage water conservation, the city’s Department of Environmental Protection last month put the New York City Housing Authority into a water conservation program that requires water meters to be installed at all of the housing authority’s 334 developments. If the housing authority cannot meet the requirements of the conservation program, it may instead be billed by water meters that track the amount of water used in a building. This could result in higher water and sewer bills for an agency already struggling with budget shortfalls and has trouble with the timely upkeep and repair of its properties.

Water already comes at no small cost for the housing authority. In 2011, the water bills for the housing authority’s developments totaled $149.9 million, according to IBO analyst Justin Bland. Under the new conservation program, the housing authority will pay about $160 million in 2013. The housing authority’s five-year operating plan shows a General Fund deficit of $61.3 million this year and $63.3 million for 2013 (about 3 percent of the roughly $2 billion budgets for public housing developments in both years).

The housing authority is not the only property owner being compelled to join the conservation program, but it is the largest. All of the city’s buildings were supposed to be metered and billed by water usage more than a decade ago. Launched in 1988 following a severe drought, the metering program aimed to be universal within 10 years. A decade after that deadline, as recounted in an October 2009 IBO Weblog Post, the program was well behind schedule, with nearly 50,000 water accounts still being billed on the frontage system—fees based on building size and the number of sinks, showers, tubs, and toilets.

As of July 1, the Department of Environmental Protection required that most of the remaining unmetered residential buildings in the city take a step towards the Universal Metering Program. The department has automatically enrolled the housing authority and other owners of properties with four or more units that have lagged behind in the city’s water metering efforts into its Multi-Family Conservation Program. The program sets a flat rate of $894.15 per apartment annually for water and sewer fees, about $60 higher than the average under the previous system. But paying the flat rate and staying in the conservation program is contingent upon installing water meters by January 2014 and “high-efficiency water-using filters” in 70 percent of a building’s apartments by June 2015.

Meeting these requirements may be a challenge for the housing authority, which is already awash in a backlog of repairs and delayed renovation projects. A June 2012 City Council Report for a budget hearing on the housing authority cited a 2011 backlog of nearly 300,000 work orders for about 17,900 apartments, 10 percent of the 179,000 units in public housing developments. And recent articles in the New York Daily News have chronicled the ongoing delays in major upgrade and renovation projects at housing authority developments. The need for such upgrades is likely to grow—1,400 of the 2,600 buildings in housing authority developments are at least 50 years old.

Many New Yorkers would no doubt agree that water conservation is an important public policy goal. But as it struggles to provide its 400,000 residents with safe and livable apartments, this may be a particularly difficult time for the housing authority to take on a new challenge.

February marks the first month that the city will not pay subsidies for families who signed leases under the Advantage rental assistance program. The city officially eliminated Advantage nearly a year ago after Governor Cuomo ended state support for the program, leaving the city without a plan to move families out of homeless shelters and into permanent housing. While no new families have entered the program in almost a year, the city had been under a court order to continue paying the subsidies for families already enrolled—until earlier this month when the order was lifted. The loss of the subsidy jeopardizes the housing of the 8,000 to 9,000 formerly homeless Advantage recipients still in the program. The city’s decision to stop paying the subsidy comes as more families are already staying longer in shelter and follows shortly after Governor Cuomo’s suspension of $15 million in homelessness aid to the city for the next fiscal year as part of his budget proposal.

The city ended Advantage, a rental assistance program that paid a portion of families’ rents for up to two years, when the state withdrew both its funding and the federal match for the program last April. (See Analysis of the Mayor’s Preliminary Budget for 2012 for details.) When advocates for the homeless sued, the city was ordered to continue to subsidize families who had already rented apartments through the program, while the court determined whether the city could stop making payments for these families before their leases end. Although final resolution is pending, in the interim, the order requiring the city to continue payments was lifted earlier this month and the city announced it would not pay the February subsidies. (The case is currently on appeal, the city won in trial court.)

The city had already spent $71 million on the Advantage payments in the first seven months of fiscal year 2012, before the court order was lifted. In addition to these costs, it is likely that the cost of family shelter will now rise. Without an alternate program or change in policies to help families move out of shelter, the length of time that homeless families stay in the city’s shelter system has increased. In the eight months after the city stopped signing new Advantage leases, the average shelter stay for a family was 316 days, nearly two months longer than the average of 258 days during the same eight months in the year before the Advantage program ended. As families stay longer, the total number of families in shelters has also begun to increase in recent months. And now that the city has stopped paying subsidies to former Advantage tenants, some of these families may also return to shelter, which would further drive up city homelessness spending.

This potential increase in shelter costs comes after the suspension of homeless aid from Albany. After the state cut Advantage funding last April, it provided a $15 million grant for a loosely defined new homelessness program in New York City—about a fifth of what the state had spent on Advantage in the prior year. According to the Mayor’s Office of Management and Budget it was largely left up to the city to decide how to use the $15 million, and the city used $10 million of the funds to help pay for the Advantage program’s continuing costs. However, the governor’s most recent budget suspended the homelessness grant for the upcoming state fiscal year noting that, “because the initiative remains under development, additional funding will be suspended pending a determination of the efficacy of the program.”

Thus, the loss of funds from Albany comes when more families are staying longer in the city’s shelter system, and when it is likely that their numbers will continue to increase. Even if the courts decide that the city must pay Advantage subsidies until the end of the remaining tenants’ leases, without a replacement program or policy change the pathway to permanent housing for current and future homeless families remains uncertain.

Every year the same story is told during the New York City Housing Authority’s (NYCHA) City Council budget hearings: There is a multimillion dollar budget gap in NYCHA’s operating budget, due primarily to the fact that neither the city nor the state provide operating funding for the 21 developments they built between 1949 and 1978. Because the city and state do not provide funds to independently support these developments, the federal funds intended to cover the 315 federal developments are being stretched to cover the costs to maintain all of NYCHA’s developments. According to NYCHA, the fact that these 21 developments have no dedicated support is responsible for $90 million of NYCHA’s annual operating deficit, which is projected to be $137.1 million in 2010. In addition, the developments are missing out on $20 million in capital financing that they would receive were they federal developments.

The American Recovery and Reinvestment Act raised the possibility of ending this storyline for good. Through a onetime exemption to the Faircloth Amendment, which prohibits the federal government from creating any new federally subsidized public housing, it will allow NYCHA to “federalize” the 21 orphan developments. To take advantage of this opportunity, NYCHA has developed what is called a Mixed-Finance Moderation plan. Under the plan, the 21 developments (which contain 20,143 apartments) will be sold to two non-profit affiliates, in which NYCHA will have a controlling interest. Stimulus money, bonds, loans and low-income housing tax credits that will leverage private funds will finance the purchase and rehabilitation of the developments. NYCHA will continue to own the land on which the developments are located and will continue to manage the apartments. Residents will continue to have the same rights and will not be displaced. While the lifting of the Faircloth Amendment restrictions will allow public housing authorities around the country to pursue similar plans the scale of the NYCHA plan is unprecedented.

For this plan to be realized, all of the needed funds must be obligated and the Mixed-Finance transaction must be completed by March 17, 2010. All stimulus-funded rehabilitation work must be completed by March 2012. The gears are in motion to make the plan a reality. According to NYCHA, the majority of the funds for the rehabilitation work have already been committed and the city’s Housing Development Corporation (HDC) has approved selling $535 million of tax-exempt and taxable bonds to finance the deal. As early as this week HDC plans to market a portion of the bonds. Furthermore, the state Assembly and Senate have approved the plan, and late last week Governor Paterson signed the bill. The deal needs approval of the New York State Division of Housing and Community Renewal. Lastly, the U.S. Department of Housing and Urban Development will need to issue final approval. NYCHA and the Bloomberg Administration are optimistic that the necessary approvals will be obtained in time for the deal to go forward.

The plan will benefit NYCHA by providing ongoing federal operating support for all of its developments. NYCHA anticipates that as early as October 2010 it will begin receiving the additional federal support. Under the plan, NYCHA anticipates receiving at least $65 million in new federal operating and capital subsidy over the course of federal fiscal year 2011, and hopes that when the plan is fully implemented it will receive $75 million to $100 million annually. Even though federal support for public housing is subject to appropriation risk, these funds are formula based and would be a much steadier source of revenue than the city or state. The private partners will benefit by obtaining Community Reinvestment Act Credits and tax credits.

While these funds will go a long way towards stabilizing NYCHA’s budget, the agency will continue to face operating and capital deficits. NYCHA’s Annual Plan for Fiscal Year 2010 projected an operating deficit of $137.1 million in 2010 and noted that the capital funds it has on hand are not sufficient to meet the ongoing needs of the aging developments. NYCHA expects that the additional funds will greatly reduce, but not eliminate, their operating deficits; nor will they be enough to fill the gap between the capital needs and resources of NYCHA. Federalization, if it is implemented as planned, will very much improve the financial stability of NYCHA, but it is not a silver bullet and more will need to be done to further stabilize NYCHA’s finances.

One clear sign of the city’s real estate downturn is the abundance of sites where the construction of apartments or commercial space has come to an abrupt stop. City officials are concerned that many of these sites pose a public safety hazard. But some also see a potential opportunity to use these projects as a resource for affordable housing.

This summer, the Department of Buildings began posting a weekly list of sites where construction has stalled. The sites have been mapped by several news sources (see Times and WNYC). IBO recently matched the department’s August 2, 2009 list of stalled sites to the department’s Building Information Services permits file and reviewed what types of buildings developers had underway. Because buildings are added or removed from the list on a weekly basis, the data offer only a snapshot at a point in time. Regardless, the list may understate the extent of the problem; as some real estate observers have pointed out, several large projects are not listed. Nonetheless, it provides some insight into the kind of projects that have been stalled and the diversity of approaches that may be needed if public officials want to jump start construction at these sites.

On August 2, 2009, the list contained 398 unique sites, roughly three-quarters of which were in Brooklyn and Queens. In total, 44 percent of the sites were in Brooklyn, 32 percent in Queens, 15 percent in Manhattan, 5 percent in the Bronx, and 4 percent in Staten Island.

Eighty-one percent of the sites were residential. These 305 sites were to produce 6,741 units of housing—apartments and one-to three-family homes. Among the rest of the stalled construction sites, 15 percent (57 sites) had been planned for commercial use and 3 percent (12 sites) were proposed for hotel or other kinds of transient occupancy. (Twenty-four of the records did not include occupancy data.)

Reading press coverage about the stalled projects, one could come away with the impression that all or most of the sites are large luxury condo developments in Williamsburg and other up-and-coming neighborhoods. While the Greenpoint and Williamsburg areas have the highest concentration of stalled projects—with over 42 of the 305 stalled residential sites and 971 of the units—in fact, most of the projects are fairly small, with less than 10 units. And over one-third (40 percent) of the stalled residential developments are one- to three-family homes.

Even though many projects have 10 or fewer units, the majority of units are in larger developments. Seven percent of the sites (20 projects) account for nearly 50 percent of the planned units (3,290). The largest stalled site is on Manhattan’s far West Side at 605 West 42nd Street, which was expected to include 764 units. The Hudson Yards and Clinton neighborhoods of Manhattan have only a half-dozen stalled residential sites, but they contain a large share of the proposed units —1,046 units or 16 percent of the total. Other areas that have a concentration of moderately sized projects include: East Harlem, Lower Manhattan, the Rockaways, Clinton Hill, Downtown Brooklyn, Prospect Heights, and Prospect-Lefferts Garden. In contrast, South East Queens (Community District 12 and the southern half of Community District 13) contains roughly 35 developments and just over 65 units.

Some policymakers consider these stalled sites an opportunity for the city to further its affordable housing goals. As city and state officials consider programmatic options, focus could easily fall on just the big sites where more units could be leveraged in each deal, perhaps at a lower cost per unit than at smaller sites, and developers are likely to be more experienced at navigating public programs.

But there is also reason to focus on the sites with fewer units, many of which are in neighborhoods already considered distressed. For example, all 39 of the stalled residential developments located in census tracts defined by the federal Department of Housing and Urban Development as distressed are one- to three-family homes. Stalled projects in distressed neighborhoods are of particular concern because they threaten to increase the likelihood of abandonment and vandalism in areas already hit by foreclosures.